William Penn Bank applies for state charter

Venerable Levittown-based thrift William Penn Bank has become the latest Pennsylvania community bank to apply to change its charter from federal to state.

William Penn CEO Terry Sager said the change from being regulated by the Office of the Comptroller of the Currency to the Pennsylvania Department of Banking will provide a cost savings in fees. She also said the bank feels a state regulator might have a better understanding of the issues facing smaller banks than the OCC.

Like all federal thrifts, William Penn was regulated by the Office of Thrift Supervision (OTS) until that agency was merged into the OCC in July. Several banking lawyers and investment bankers have told me that many of those federal thrifts are evaluating whether to go with the OCC or switch to a state charter.

Sager said because the bank was changing regulators anyway, it was a perfect time to apply to switch.

Newtown-based Third Federal Bank has also applied, citing a $100,000 cost savings as a primary factor. Souderton-based Univest Corp. of Pennsylvania switched from a federal to state charter earlier this summer and the Pennsylvania Department of Banking told me in August that at least seven other banks statewide have inquired about doing the same.

William Penn has been in operation since 1870. It has $329 million in assets and four locations— two in Levittown and one each in Richboro and Morrisville. Sager said the bank focuses much of its lending on mortgages in Bucks County. While not as hard hit as other regions, she said the bank’s customers have been affected significantly by the downturn and that smaller banks like William Penn are faced with a disproportionate regulatory compliance burden compared to larger peers.